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Chapel Hill, N.C. — Kelli Hammond had a difficult decision to make – go to the University of North Carolina at Chapel Hill, a school she had dreamed of attending her whole life, or go with the less expensive option of the University of North Carolina Wilmington.

Grades weren't a factor. Hammond excelled throughout her high school years in Rutherfordton. This decision came down to one thing – money.

It's a choice faced by many promising students each year. Of the nearly 160,000 resident undergraduate students enrolled in the University of North Carolina system in 2012-13, nearly 59 percent – about 94,000 students – received some sort of need-based aid.

Hammond says she finally turned to her mother for advice after debating her decision for almost a month.

"She said, 'Go for it ... We'll figure it out,'" Hammond recalled of her mother's encouragement to go to Carolina, her dream school.

Not long after committing to Carolina, Hammond received a letter in the mail that allowed her and her mother to breathe a "huge sigh of relief." Hammond had been named a Carolina Covenant scholar, a newly formed program at UNC-CH that allowed low-income, high-performing students a chance to graduate debt-free.

"That was absolutely amazing," Hammond said. "To this day, I don't know how my mom and I were going to pay for it."

Characteristics of Carolina Covenant scholars

Fall 2010

Fall 2011

Fall 2012

Fall 2013

New Covenant scholars

553

579

569

669

Average high school GPA

4.33

4.42

4.41

4.45

Average SAT score

1219

1209

1226

1221

NC residents

80%

85%

87%

83%

NC counties represented

76

78

81

83

Female

64%

65%

60%

64%

Male

36%

35%

40%

36%

Students of color

54%

58%

56%

58%

First-generation students

57%

58%

51%

54%

Source: UNC Office of Scholarships and Student Aid and Office of Institutional Research and Assessment

Carolina Covenant marks 10 years

Now in its 10th year at UNC-CH, Carolina Covenant has helped nearly 2,500 students earn a degree without little or no debt. One of the most "remarkable gains" among Covenant scholars, according to UNC, is the improvement made by men – most notably black men, whose graduation rates have nearly doubled since the program was established.

The program awards eligible students – those who fall below 200 percent of the poverty standard – a combination of grants, scholarships and work-study opportunities that meet 100 percent of their financial need with no loans. Institutional and private funds make up the largest source of the money awarded to scholars.

The average University of North Carolina at Chapel Hill student who borrowed money graduated with $16,150 in student loans in 2012-13.

In comparison, the median parental income for resident undergraduates receiving need-based aid was $56,511. For nonresident undergraduates receiving need-based aid, the median parental income was $78,384. North Carolina's median household income during that same time was $46,450, according to the U.S. Census Bureau.

"Carolina wants to protect the ability of all families to get an education," said Shirley Ort, associate provost and director of scholarships and student aid at UNC-CH.

Ort says she created the program more than a decade ago with one goal in mind – "to transcend all the bureaucracy and send a really simple message: If you prepare academically and can get into Carolina, you don't need to worry about paying for it."

Outcomes for Carolina Covenant scholars

Source: UNC Office of Scholarships and Student Aid and Office of Institutional Research and Assessment

The message to low-income students: There's money

"I wanted to make sure young people know that they could come, even though their families didn't have money," Ort said. "When you go out into the community, especially among low-income (families), they don't understand there really is money out there. When you tell them there's money, they think it's for somebody other than them."

Navigating the world of financial aid can be overwhelming, especially for students who are the first in their families to go to college. Last school year, 54 percent of the 669 new Carolina Covenant scholars were first-generation college students, according to UNC. Since 2004, that percentage has held fairly steady and ranged from 52 percent to 58 percent.

Eve Vongchucherd, a counselor at Phoenix Academy High School in Chapel Hill and a former UNC student, knows the struggle of explaining the technical world of financial aid to families.

"A lot of my students, if you use the term 'financial aid,' they might not know what it is," she said. "What I tell any student is that money should not the deciding factor of whether or not you go to college ... because there are so many resources out there."

Those resources come in different forms. Financial aid can come from federal, state and private sources in the form of grants, loans, scholarships and work-study opportunities.

UNC-CH scholarship and financial aid awards

2002-03

2011-12

2012-13

Total aid awarded

$160.1 M

$370 M

$400.3 M

Number of students

13,071

20,475

20,709

Average award

$12,245

$18,073

$19,329

Federal funds

56%

49%

48%

State funds

10%

5%

5%

Institutional/private funds

34%

46%

47%

Scholarships/grants

44%

53%

53%

Work-study

1%

1%

1%

Loans

55%

46%

46%

This 10-year data includes all need and non-need-based awards for all students, including undergraduate and graduate/professional. Source: UNC Office of Scholarships and Student Aid and Office of Institutional Research and Assessment

New UNC system policy limits financial aid funds

Records show 135,420 undergraduate students in the University of North Carolina system received about $1.69 billion in student aid during the 2012-13 school year – or an average of $12,475 per student.

On the Chapel Hill campus, the average student graduated with $16,150 in student loans in 2012-13. The cumulative debt burden for students was $685 less in 2012-13 than a decade ago, when adjusted for inflation, according to UNC.

Among the challenges, according to UNC, is the sustained rise in needy students and flat funding from the state and federal governments for aid.

Data from UNC's Office of Scholarships and Student Aid shows that, while the total aid awarded to all students has gone up over the past decade – from $160.1 million in 2002-03 to $400.3 million in 2012-13 – federal and state contributions have gone down while institutional and private funds have gone up.

Ort says fewer tax revenues at the federal and state level have caused UNC to be "ambitious about trying to generate new gifts."

In August, the University of North Carolina system's Board of Governors voted unanimously to cap the amount of total tuition revenue that can be returned to middle- and low-income students across the UNC system.

The 15 percent cap, which kicks in next school year, is expected to affect UNC-CH. During the 2013-14 academic year, the school returned 20.9 percent of tuition revenue to students as need-based financial aid, which was about $19 million beyond what the new cap would have allowed, according to University Gazette, UNC-CH's internal publication.

The previous year, UNC-CH reserved 38 percent for financial aid, according to the school.

The Board of Governors' policy change in August was in addition to a new, four-year tuition plan that caps annual tuition increases at 5 percent, which is lower than the 6.5 percent cap approved in the previous four-year plan.

"Board member W. G. Champion Mitchell said limiting the amount of money reserved for financial aid, along with the 5 percent tuition cap, is part of the board’s overall goal for curbing the rate of tuition growth," according to University Gazette.

In a statement, UNC-CH Chancellor Carol Folt said the school is "determined to find ways to continue to offer our financial aid programs to all students who need them, because our commitment to affordability and accessibility remains central to our mission."

Former student: 'I would have still been in debt'

How the new cap could affect the Carolina Covenant program is still unknown, but UNC leaders say they are committed to the program.

"I have assurances (that) this is an institutional commitment, and it's one we take pride in and honor," Ort said.

"How we would have figured it out, I have no idea. I would have still been in debt ... It's the reason I got to enjoy Carolina without worrying about the money."– Kelli Hammond, former Carolina Covenant scholar

That's welcome news to Hammond, who says her mother might not have been able to afford to send her to UNC without the program.

"How we would have figured it out, I have no idea," she said. "I would have still been in debt ... It's the reason I got to enjoy Carolina without worrying about the money."

Hammond now works for Central Carolina Community College, where she's a lead career and college advisor, and says she hopes to return to Carolina someday and help other students.

"I would love to go back to Carolina and get my PhD in education," she said. "I see myself continuing down a path to helping students reach their college goals."

It's stories like that, Ort says, that make her grateful that UNC has supported Carolina Covenant.

"When we started the program, we all thought it was a public service," Ort said. "What we have learned is it has benefited us. We have a much better understanding of the struggles faced by students ... It changed us, not just them."

liskmSep 30, 2014

I'd rather see/assist people get an education than not and ending up with more costly funding of prisons to house the 'lost' populace instead.

Wise Man SaysSep 30, 2014

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Can I get a refund on my money that was used to pay for your children's education?

— Posted by Kenny Dunn

No, but you should demand a refund for the cost of your own education, especially when it comes to civics.

Kenny DunnSep 30, 2014

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Education IS an investment... it costs money.... more than most of all the other countries in the world... but just dont expect me to pay for it. As I'll be paying for my own kids education. Socialism is great... until you run out of other peoples money.

— Posted by Maurice Pentico Jr.

Can I get a refund on my money that was used to pay for your children's education?

SaveEnergyManSep 30, 2014

I have no problem with helping low income students with college costs. However, raising tuition on some so that others can go free is plain wrong. Those supposed middle income folks have to borrow and are saddled with the debt of their college and someone else's too for years. Perhaps those millions in donations I hear about could help. How about the millions paid to the football and basketball coaches?

Another issue is the rampant building and rise in fees - much of it to build things having nothing to do with education like student centers, elaborate gyms, and to build athletic facilities a regular student can't even use. Eliminating these would help everyone.

cruisechikSep 30, 2014

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I was also wondering about the SAT scores , was that on the 2400 max scale or the old 1600 max scale.

Also I wonder if these students are Illiterate like the UNC football players ?

— Posted by raphael27520

It's the combined Reading and Math score. Many colleges don't consider the Writing score as relevant.

early exit RoySep 30, 2014

Free education, free food, free doctor visits, well that probably equates to about 50-60K a year. On top of that no taxes. Who says it doesn't pay to not work?

A cold, hard dose of HansSep 30, 2014

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This is not fair to the hard working people that can't afford to send their kids to college.

— Posted by Mary Boehm

How exactly is it not fair?

Danny22Sep 30, 2014

I much rather hire the kid who worked and borrowed his/her own way thru college than the kid who sat on his/her behind while somebody else paid. The go getters are a cut above both ends of the income levels because they know how to sacrifice and work.

Objective ScientistSep 30, 2014

Continuation of previous post... : After my Dad, then my Mom passed away and as Executor I worked to settle their estate for me and my 2 younger brothers... I saw all the old "bank records", etc. from my college years. Subsequently I realized more than ever how much they sacrificed for my college education. It seems they made "just barely enough" money for them and me not to receive aid. Through continued hard work both academically and in the "working world" I subsequently earned MA and PhD degrees... so "it all worked out well" in the end... I'm "good". Nevertheless, given the circumstances of a student (me) who was Valedictorian, great SAT scores, played several sports (team captain, All-Conference, etc.), held many school offices, active in the community, etc. and my parents income level that was "just enough" for us not to receive ANY aid when someone who had an income level barely below my parents received a LOT... there is something wrong with that picture!!!

Mary BoehmSep 30, 2014

This is not fair to the hard working people that can't afford to send their kids to college.